“How Elections Widen Inequality: Electoral Accountability and Labor Market Policy”

Departamental seminar
Dani Marinova (UAB)
16 December, 2016, 13:15h, Sala de Juntes

While political economists insist that elections create perverse incentives for election-year
spending, scholars of economic voting have long upheld elections as an instrument of accountability
that incentivizes good stewardship of the economy. The direct impact of electoral accountability on
policymaking has been rarely examined, however. This study traces labor market policies
implemented in response to rising unemployment – a robust predictor of reelection – across 20
OECD countries. Labor market policy is more likely to materialize when institutions make clear
who is responsible for economic performance and incumbents can expect to pay the electoral price
for inaction. Such policies, however, do not aim at the constituencies most vulnerable to
unemployment but at labor market insiders who represent an important electoral constituency. Only
in contexts where insiders face considerable labor market risk does policy, incidentally, also favor
outsiders. In the long run, accountability inadvertently deepens labor market segmentation and
widens preexisting inequalities.